The Earned Income Tax Credit is a financial advantage or relief for workers who earn $48,362 or less every year. Each year, some taxpayers file for the EITC and receive it if they are eligible. If you qualify for this tax credit and are entitled to receive it, it can make your life (and wallet) better, as it has been for many people over the years.
There are some things you should know about the EITC:
It is important to continually keep up with and evaluate the Earned Income Tax Credit qualification rules to establish whether you are eligible due to the fact that your monetary, parental, or marital conditions may change with every tax year. If you did not qualify the previous year, it does not mean you will not in the next, so always keep checking.
If you qualify for the Earned Income Tax Credit, your credit could come up to $5,666. Not only does the EITC reduce your federal tax, but also could result in a refund. The amount of the EITC you receive depends on your earnings and if there are qualifying children in your home.
Once you qualify for EITC, you will be required to file an income tax return and explicitly and actively claim the credit.
However, note that if your filing status is Married Filing Separately, you are not eligible for EITC.
You are also required to have a valid Social Security number. This also includes your spouse and any child listed on the Schedule EIC.
You must also have earned income. You have earned income if you are employed by someone who pays you wages, get income from farming, or if you are self-employed. In some cases, you could be receiving disability income.
Single people without children or dependents and married couples may be eligible for the EITC. If you do not have any kids, you should meet the requirements for residency and age and the dependency rules in order to qualify.
There are special rules for people who are members of the U.S. Armed Forces in combat zones. These individuals can decide to include their nontaxable combat pay in earned income for the EITC. If they make this decision, their combat income will remain nontaxable.
If you want to establish whether you are eligible, it is very easy to do so. There is an interactive tool on the website, The EITC Assistant, which gets rid of the guesswork from eligibility rules. You will just need to answer some questions to establish if you are eligible and approximate the amount of your Earned Income Tax Credit.
These are just a few important things you need to know about the EITC. You can get more help at IRS Taxpayer Assistance Centers to help you in the preparation and claiming of your EITC.